Have you ever wondered about Affiliate Marketing Vs Network Marketing? Here is a quick guide that can help you to understand the difference.
You may have seen one or more relatives/family friends sitting at your home, pitching the idea about Amway soaps to your parents. They might have mentioned the commissions and multi-level marketing (MLM) products. However, you didn’t know that it all comes down to affiliate and network marketing.
As a business owner, you know the magic marketing can bring to the table. It holds power to attract audiences and convert them into potential leads. The marketers work with product development, sales, distribution, and advertising team to bring customers that can purchase services and products.
With the help of marketing strategies, companies can sell, engage, inform, enhance credibility, and expand their business. However, brands need to know what works for the market and competitors. It includes affiliate marketing and network marketing.
Let us help you understand what affiliate and network marketing are all about.
What is Affiliate Marketing?
You must refine your definition if you say affiliate marketing is similar to MLM companies, programs, and network marketing.
Affiliate marketing is where you can gain commissions by selling the products. The promoters affiliate themselves with the products that consist of single-level commissions. Consider it a sales model that spreads awareness about the service or product in the market, giving commissions to the affiliates when they make the sale or convert leads.
Affiliate marketing is divided into two major categories – brands and affiliates.
Affiliates are the marketers or promoters responsible for promoting the product or service in significant niches through shopping sites, bloggers, product review websites, mobile apps, loyalty, and coupons. In contrast, the brands offer services or products that affiliates promote, such as eCommerce, travel, broadband, retail business, and many more.
In simple words, an affiliate program can help in earning satisfying commissions. However, it comes with several pros, cons, challenges, and opportunities that enable businesses to run smoothly when the sky is the limit.
Pros of Affiliate Program
- Low-Cost Business Idea – The best thing about an affiliate program is that it doesn’t have any barrier to growth in the market. The marketers can start with a new marketing website, decide on the niche, and start with the promotion.
- Flexibility – One can create several blogs, campaigns, social media posts, and advertisements to market the links without sticking to a number. You can promote the affiliate link often if you get money back as commission.
- Low Investment Costs – An affiliate program comes with no investment costs to establish a website and start with your business.
- Billion-Dollar Business – If you are unaware, the affiliate is a billion-dollar industry ruling the market with great incentives.
- No Expertise Required – Affiliate doesn’t require expertise; you can get started with standard campaigns to optimize successful patterns.
- Secondary Income – Marketers can pursue the affiliate website while working full-time and generating revenue via an affiliate.
- Independent Working – You will be your boss, with no one to tell you what to do, and it is a great way to start your independent working mode.
Cons of Affiliate Program
- Competition – Irrespective of the benefits of affiliate marketing, competition is something you can’t control. People have been joining affiliates for some years now due to its wide range of benefits, but it has come down to high competition that you need to strategize around.
- Strict Rules – One must follow all the affiliate merchant’s rules and regulations. You might be your boss, but you must ensure the guidelines are followed while sharing the links.
- Lack of Customer Base – The customer may make the first purchase via your link, but they won’t do it again. Customers may directly go to the merchant’s site to make the necessary purchase and get it done.
What is Network Marketing?
As the name suggests, network marketing works with the distributor’s network that entails systematic strategies such as lead generation, recruiting, and management. The companies target the distributors to get on board with the products and start selling them.
Network marketing comes in different levels, such as:
- Single-Tier Network Marketing – It focuses on selling services and products.
- Two-Tier Network Marketing – It focuses on direct sales by affiliates or distributors.
- Three-Level Marketing – It focuses on distribution-based marketing.
The companies don’t follow a commission-based system in network marketing but hire those who know the products as distributors. These distributors are given products at a discounted rate that they can sell in the market at printed prices.
Downlines commissions are offered to the existing distributors to recruit new people and get a small sale percentage where the cycle can continue. It is also known as multi-level marketing and can help users earn money while selling the products.
Pros of Network Program
- Start with business opportunities – It is a great way to start working on your business idea and get into the market.
- Share services to the customers – One can start with social networking while sharing experiences and weight loss stories.
- Flexibility – One can get more time at home without investing much time in selling the products.
Cons of Network Program
- Face-to-Face Sales – Most network program sales are face-to-face rather than online sales.
- Takes time to earn money – The distributors will take time to make money as it doesn’t come instantly as in affiliate.
Affiliate Marketing Vs. Network Marketing
The best thing about affiliate and network marketing is that they don’t follow complex marketing infrastructure. However, this is the only difference between affiliate and network marketing. Here is a deep dive into the differences between affiliate and network marketing.
Customer-Referral Platform
Affiliate programs are easy to promote using social media platforms like Facebook, Twitter, Emails, Blogs, Instagram, Websites, and YouTube. Use the content for your leverage and put the referral link in it. The customers can purchase products using your link, and you will get the commission.
For a Network program, one has to network in the real-world (not the virtual world) to build a business-based relationship. This relationship (leads) are then converted to make them into potential customers.
Compensation Plans
Regarding affiliate programs, the affiliates can earn a commission whenever someone makes a purchase using the link or referral code. The commissions can be higher or lower depending on the program type and the company offers. You can start with a YouTube channel or a blog to generate money.
However, network marketing will help in generating money only when you have a sizeable network where you can promote the products. Some members have to purchase the products beforehand, and then they can start by promoting them based on their personal experiences.
Joining Cost
For the affiliate marketer, there is no joining cost for most of them. There is a small amount for a few affiliate programs, usually credited back to the affiliate with the first payment, but most are free of cost for affiliates. However, you may want to include the website cost if you plan to start selling the products.
However, with network marketing, one has to purchase the products at a discounted rate (minimum of $100) before selling them. The distributors must use the product and showcase their experience in the market to promote it and earn money. Along with this, the distributor has to pay for all the expenses.
Risk Factors
Affiliate programs come with minimum risk as there is no investment cost (for maximum programs) except the website development and marketing. However, in the long run, your website and marketing strategies can help you more than you expected.
With network programs, you need to invest initially for the program (in most cases) and will have to meet the monthly target (that is not possible every month).
Base of Marketing
As mentioned above, affiliate marketing is easy with digital platforms like blogs and YouTube channels. It allows users to just put up the content with the link of specific product(s) and get started with generating money.
However, network marketing focuses more on customer sales that make representatives meet people face-to-face. It concentrates mainly as the customer to customer sales.
Scheme
If you are confused about the pyramid schemes and straight-chain, you might be keeping yourself away from affiliates and networks. A straight-chain marketing strategy is ideal for affiliate marketing, whereas network marketing is more of a pyramid scheme strategy.
Monthly Quotas
The best thing about affiliate marketing is that nothing will happen if you have a slow month (where you don’t make any sales). You won’t get demoted or fired as there are no ranks, and you are not an employee at the company. You will be your boss without any worries about the monthly quota and zero sales. The downside is only no money for that month.
However, network marketing comes with a minimum sales quota for the distributors, called the qualifying or personal volume. One needs to meet the market, or they lose commissions, be demoted to lower ranks, and get fired. If you want to save yourself from getting fired, purchase the product.
Businesses to Promote
Affiliate marketers have the freedom to promote several products at once, from hostels to food and travel companies to Amazon Associates programs. The choice is yours. Start with the product, mention them in the blog, and start promoting all the products at once, if that’s what you want.
Network marketing is about promoting a single company’s products, as going for more than once can negatively impact your name. The promoter can opt for companies like Amway, Herbalife, Mary Kay, and Avon products. You must send an excellent message to the company before opting for others.
Conclusion
Undoubtedly, affiliate and network marketing have their pros and cons, making promoters opt for one of them. It is best to analyze and compare the programs, understand what they entail, and then decide on one of them. Also, check what will happen if you don’t make a sale in a month in network marketing to get a clear picture before committing to it.
You may look at some of the best affiliate programs you can join and make money.
